Page 45 - DCOM308_DCOM502_INDIRECT_TAX_LAWS

Indirect Tax Laws

Notes The rules of classification of Excisable Goods are:
General Rules for Interpretation of Schedule to Central Excise Tariff and Customs Tariff are
given in First Schedule to the Tariff. The rules are same for excise and customs. The highlights of
rules are given below:
Rule 1
Classification shall be determined according to the terms of the headings and any relative
section or chapter notes and, provided such headings or Notes do not otherwise require, according
to other provisions of the rules.

First part of rule 2(a)
Any reference to complete goods also includes incomplete or unfinished goods, if such incomplete
or unfinished goods have the essential characteristic of finished goods.

Second part of rule 2(a)
Heading will also include finished goods removed unassembled or disassembled i.e. in SKD or
CKD packs.

Second part of rule 2(b)
Any reference in heading to material or substance will also include the reference to mixture or
combination of that material or substance with other materials or substance. The classification
of goods consisting of more than one material or substance shall be according to the principles
contained in rule 3.

Rule 3
When by application of sub-rule (b) of rule 2 or for any other reason, goods are, prima facie,
classifiable under two or more headings, classification shall be effected as given in rule 3(a), 3(b)
or 3(c).
Rule 3(a)
The heading which provides most specific description shall be preferred to heading providing
a general description.
3(b)
If Mixture and Composite goods consisting of different materials or different components cannot
be classified based on above rule i.e. rule 3(a), it should be classified as if they consisted of the
material or component which gives it their essential character.

3(c)
If two or more headings seem equally possible and the dispute cannot be resolved by any of the
aforesaid rules, if both the headings appear equally specific, the heading which occurs last in
numerical order is to be preferred (i.e. latter the better).
Rule 4
If the classification is not possible by any of the aforesaid rules 1, 2 and 3, then it should be
classified under the heading appropriate to goods to which they are most akin. [This is only a
last resort and a desperate remedy to resolve the classification issue.]

Rule 5
Cases for camera, musical instruments, drawing instruments, necklaces etc. specially shaped for
that article, suitable for long term use will be classified along with that article, if such articles are

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